“A lot of people are wondering right about now how Dell is going to pull itself out of the drink, particularly in the consumer segment of the PC market. The company gets about 15% of its PC business from consumers, compared with an industry average of about 42%,” market researcher Roger L. Kay writes for BusinessWeek.
“Given that Dell must expand its presence in the consumer segment, it really has two main choices: traditional third-party retail, such as Best Buy and Circuit City, or ’boutique’ company stores, such as those run by Apple,” Kay writes. “The University of Chicago Business School recently published a paper on whether it’s better to sell through a boutique or against competitors on retail shelves. In the course of their research, professors Christopher K. Hsee and France Leclerc discovered that if a product is perceived as above average, competitive comparison is detrimental… On the other hand, a product perceived as below the mean does better offered against others.”
“The results of Apple’s company stores speak for themselves, but Gateway tried the same thing and got creamed. Why go to the Gateway store for ho-hum products when the selection at Best Buy next door is much broader and the shopper can compare prices? Taking the company-store route requires premium products and a readiness to spend on high-end locations and pricey leasehold improvements, not to mention high fixed costs,” Kay writes.
“So, here’s a radical suggestion for raising consumer awareness without abandoning the efficiencies of the direct model: Open high-end nightclubs in the best locations in major-league cities like New York, Los Angeles, London, and Tokyo. That’s right, bars—hip, adults-only establishments, complete with velvet ropes, beefy bouncers, and limos idling out front. You get the idea,” Kay writes.
Kay writes, “Then, outfit tables with Dell computers, monitors, and other gadgets, and run a multimedia floor show at the same time. Charge big bucks for the drinks to discourage punks and build cachet for the brand. Think Studio 54 gone ultra high-tech. No product for sale (how gauche!). But use the venue to showcase sexy products, to associate the Dell name with exclusivity and cool. Generate buzz.”
Full article here.
You can’t make this stuff up. Is Kay completely insane or is this supposed to be a joke? Dell is a run-of-the-mill PC box assembler that offers nothing unique. It’s just another box that runs Windows; there simply is no exclusivity. A high-end, high-tech nightclub outfitted with Dell PCs makes absolutely no sense, as the first question out of any informed patron would be, “So, where are the Macs?” High-end tech just doesn’t equate with Dell. Neither does “cool.” People just aren’t going to buy the suggestion. We have a much better, more realistic suggestion for Dell: Shut it down and give the money back to the shareholders.
On the other hand, if they did offer the PCs for sale in the clubs, getting people drunk enough just might be Dell’s best option…
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